Lexar Drops All Claims Against SanDisk

LEXAR DROPS ALL CLAIMS AGAINST
SANDISK RELATED TO THE COMPACTFLASH ASSOCIATION

SanDisk Corporation (NASDAQ:SNDK)
announced today that Lexar Media Inc., in response to a motion
to dismiss filed by SanDisk, has dropped all claims against SanDisk
related to the CompactFlash Association (CFA). Lexar agreed to
remove any allegation that SanDisk used its position in the association
to engage in unfair competition, commit trade libel or interfere
with Lexar's prospective business advantage.

Nelson Chan, SanDisk vice president
of marketing, said, "When Lexar filed its CFA-related claims it
also issued a highly inaccurate press release aimed at harming
the image and reputation of both SanDisk and the CompactFlash
Association. Now, by dropping all of its CFA-related claims, Lexar
has conceded that it never had a factual basis for the allegations."

SanDisk also announced that Lexar
also dropped other claims against SanDisk in a lawsuit filed against
SanDisk. The Federal District Court for the Northern District
of California has issued an order giving Lexar permission to amend
its lawsuit against SanDisk and to remove the claims.

Lexar agreed to drop its claims
against SanDisk for unfair competition and false advertising under
California common law and for negligent interference with a prospective
business advantage.

The court also denied several of
Lexar's specific requests for injunctive relief. Lexar's preliminary
injunction motion asked that SanDisk issue an immediate public
statement stating that the court had found that Lexar is likely
to win its false advertising claim. The court further denied Lexar's
request that SanDisk make no further representations stating or
implying that SanDisk CompactFlash cards are faster than Lexar
CompactFlash cards in the following camera models: Hewlett Packard
C20, Epson Photo PC 700, Kodak DC120 and Kodak DC210.

The court did issue a preliminary
injunction that requires SanDisk to stop the further distribution
of a chart based on SanDisk product testing that compares the
relative performance of SanDisk and Lexar flash memory cards in
digital cameras. The court found that SanDisk's use or suggestion
in the chart of the "click to click" terminology should be changed
to "release to click" terminology.